In Mexico, the U.S. Downturn Hits Home

Poor Towns Especially Hurt as Immigrants' Money Transfers Drop Sharply

EL ARENAL, Mexico -- When Jesus Barrera Lopez had a sweet job laying tile floors in Phoenix, he did what every migrant from his home town in central Mexico does: He sent home money, bundles of it.

"Before the economic recession started, I usually sent $300 or $400 every two weeks to my family. But when the crisis came, I only sent like $100," said Barrera who recently returned here to the hot, rocky hills in the state of Hidalgo after the construction industry in Arizona imploded and work became nearly impossible to find.

And now? "There's nothing," said Barrera, 29, hanging out in his half-finished house and remembering the boom times, when he and 50 migrant workers from El Arenal sent money home at Christmas to host a party for the whole town.

Remittances sent home by Mexicans in the United States are the second-largest source of legal foreign revenue in the country, after gasoline exported by the national oil company. These electronic cash payments are vital not only to families that receive them but also to the regional and national economies. Last year, according to the Bank of Mexico, migrants sent home $25 billion.

But the remesas, as the remittances are called, have been falling steadily since the end of 2007, when construction, manufacturing and service industries began to sputter. These sectors employ a disproportionate percent of the almost 12 million Mexicans living in the United States, most of them illegally.

In 2008, for the first time, remittances fell 3.6 percent for the year, a jolt to government of President Felipe Calderón, who had been promising Mexicans that the country would escape the worst of the global downturn. Then came the shock. In April, migrants sent $1.8 billion to Mexico, a drop of almost 19 percent from April 2008. The central bank estimates that 1 in 5 Mexican families receives these transfers from aboard.

"It can't get any worse than this for Mexico," said Mauro Guillen, director of the Lauder Institute at the Wharton School in Philadelphia and an expert on Latin American economies. "There's the recession, the drug violence, the bankruptcies in the automobile industry -- then they get hit by the flu pandemic, which just kills tourism, and now their remittances are under attack. It's crazy. And it is very sad. People are suffering."

Although remittances flow to families across Mexico, the transfers are especially important in rural villages and towns in the poorest states -- places such as El Arenal, which for generations have sent migrants north to work.

"You can see in the community how the migrants have stopped sending money home, because you can see that their houses are all unfinished," said Adolfo Zuniga Fuentes, El Arenal's new mayor.

During the boom times up north, the money transfers might even buy such luxuries as a new set of tires or a fancy birthday dress. "They use the money now for food," the mayor said. "They use it to eat."

Zuniga estimated that 20 percent of the adults here leave, mostly to go to the United States.

The Mexican government has a program that matches at a rate of 3 to 1 money sent home by migrants for public works in their towns -- to help build schools, clinics, a playground. The mayor submitted 15 projects this year, he said, "but we haven't received money from our immigrants in the last months, so that's pretty bad because we will lose the support of the government."